Friday, February 26, 2010

Is the circus over?

With a title like that these days, there are two things i could be referring to, but I can't bring myself to even register an opinion here on one of them. Portsmouth Football Club have finally gone into administration. So the big stories there are that the team should survive for the rest of the season at minimum and Peter Storrie will finally be leaving the south coast club. With administration comes a point deduction and inevitable relegation.

So why is this a big deal when football teams go into administration all the time? The first part is that this is the first time that a Premier League team to do so which begins to lead to questions of who else in the Premier League could be at risk. I'm not going to discuss this matter here as I would rather focus on Pompey and what they have done and what can be done to prevent it. The second issue relates specifically to England where it has been reported this week that English football holds around 56% of the debt in all of World football. This means that English clubs have taken on so much debt that the league could risk a major fall if some of the clubs aren't careful and worse yet, if the teams who are teetering on the brink lose the revenue from competitions like the Champions League(i.e. Liverpool).

I think the important place to start is to see how this happened. The case of Portsmouth comes down to a relatively simple situation of overspending and taking on to much debt. When the club won the 2008 FA Cup, the team began to build and repay their players for their success with larger contracts. Reports claim that goalkeeper David James gets 50000 pounds a week and John Utaka makes around 80000 pounds per week. this kind of spending has helped lead to debt levels which have been reported to be in the realm of 70 million pounds. The debt level is unbelievable because the fans and club have been complaining that they can't make enough money due to the fact that they are in the smallest stadium in the Premier League. With the problems surrounding the stadium, it is unclear who even owns the land around Fratton Park. The real question for how this happened is who is at fault. Most people leave the blame at the feet of executive Peter Storrie. There is atleast some blame to be had by Storrie. He takes more than 100000 pounds per month and he is responsible for the signings and contracts. The story has echos of the downfall of Leeds United where Leeds had borrowed against the TV revenues and spent too much and were forced to sell a great number of their players. This is almost identical to the situation at Pompey. The issue being, will they be following Leeds' path down to League One?

How can this kind of problem be prevented in the future? UEFA President Michel Platini has back a number of ideas which should help turn the tide to financial responsibility. He supports wage caps and caps on transfer spending either in absolute terms or in terms of a percentage of club turnover. Even his idea of the 6+5 rule I believe would be good for football finance. The rule would call for the a given teams side to be composed of atleast 6 home internationals. This would likely reduce transfer spending and hopefully help to bring wages under control by reducing scouting outside each country. I don't support the idea, but it could be a measure that gets true consideration. Finally, Platini has talked about barring teams who maintain high levels of debt from participating in European competition. It is a controversial idea, but would force teams to stop their reckless practices with debt. In addition to Platini's ideas, the transparency used on German and French clubs should be used worldwide, and would help to keep clubs accountable for their spending and financial practices.

So this is a sad day, because it will be the day where we either say, "that was the day that football learned to run itself properly," or we'll be saying "that was the day football fell apart." I really hope its the first one.

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